NAM Survey Of Board Delivers Discouraging Manufacturing Outlook

By John S. McClenahen Although Arthur D. (Don) Wainwright, the newly installed chairman of the Washington-based National Assn. of Manufacturers (NAM) insists "the structure of the [U.S.] economy is basically strong," U.S. manufacturing remains stuck in recession. A just-completed survey of NAM's board of directors shows that a solid majority, some 61.5%, expect their industries to be in recession this calendar quarter and in the first quarter of 2002. Another 29.2% of the 65 CEOs surveyed expect that growth in their industries during the period will be less than 2%. A dramatically faster pace of capital spending will be essential to a U.S. economic recovery, and on that front the NAM board members' forecasts are downright discouraging. About one-fifth (21.5%) of the CEOs expect to spend less on software in 2002 than they did this year. Nearly one fourth of the executives -- 24.6% -- expect to spend less on computers and telecommunications equipment. And 24.6% expect to spend less on machine tools and other kinds of equipment in 2002 than they did in 2001. Given their own reluctance to invest in new plants and equipment, it's not surprising that the members of the NAM board are more bearish on overall U.S. economic growth in 2002 than are many broader-based forecasters. Some 26.2% of the NAM CEOs believe the U.S. economy will continue to contract during the first six months of 2001, and another 60% predict GDP growth will be 2% or less. During the second half of next year, growth will be 2.5% or less, say 86.2% of the NAM CEOs, a sharp contrast to financial economists who are anticipating close to a 5% GDP growth rate in the second six months of next year. To help get the U.S. economy growing again, accelerated depreciation schedules would be the "most important" part of a federal economic stimulus package, says Wainwright, who also is chairman and CEO of Wainwright Industries Inc., a family-held, St. Louis-based diversified manufacturer. His NAM board colleagues concur -- and rank a corporate-income-tax rate cut and elimination of the corporate alternative minimum tax as the two next most helpful tax policy changes Congress could make now.

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